iTunes sales row data over-hyped

Following an outcry from Apple, analyst house Forrester Research has claimed its recent report, which found an iTunes sales slump in the first half of this year, has been misinterpreted.

A study by the analysts had claimed that monthly iTunes revenue fell by 65 per cent during the first six months of 2006 - a claim Apple branded as "simply incorrect".

"It is too soon to tell if this decline was seasonal or if buyers were reaching their saturation level for digital music," the Forrester report said, adding after two years of growth the online store may have peaked.

Since publication of the report, Apple's stock dropped three per cent and one of the analysts behind the report, Josh Bernoff, has received calls from worried hedge fund managers, according to his blog.

Bernoff wrote: "We got treated to wonderful headlines about iTunes sales 'collapsing' and 'dropping' and 'plummeting' and so on. Now for the record, iTunes sales are not collapsing. Our credit card transaction data shows a real drop between the January post-holiday peak and the rest of the year, but with the number of transactions we counted it's simply not possible to draw this conclusion."

He added that while sales are levelling, the news doesn't spell doom and gloom for Apple.

"Apple is not in trouble - it makes its money mostly from iPods and iTunes is just a way to make that experience better. It's the music industry that has to worry, since the $1bn a year or so from iTunes, globally, doesn't nearly make up for even the drop in CD sales in the US, which are now down $2.5 billion from where they were," Bernoff said.

A report from fellow analyst Piper Jaffray found that sales during 2006 had actually grown, reporting a 78 per cent increase in sales in the first nine months of the year.

Apple itself does not give out figures for iTunes sales, apart from publicising the odd landmark download figure. At times like these, Bernoff suggests, Apple would be wise to do more talking.

"Their unwillingness to comment on the record or off about anything they're working on or any industry results beyond the basic statistics fuels speculation, pro and con, from their supporters and detractors. In the research business we like facts - and every other technology company is more open with them.

"So maybe it's time for Apple to share a bit more. When the real bad news hits - and it's inevitable, no company gets everything right - that openness would pay off," Bernoff noted.